Geralyn Gallagher v. Best Western Cottontree Inc. and Snake River Petersen Properties, LLC

This is an appeal from the district court’s order granting summary judgment and dismissing Geralyn Gallagher’s (Gallagher) lawsuit against the Best Western Cottontree Inn (the Hotel) and Snake River Peterson Properties LLC (Snake River). The district court held that the amended complaint did not relate back to the date of the original filing and that the statute of limitations was not tolled by Snake River’s failure to file a certificate of assumed business name. We vacate and remand.

I. FACTUAL AND PROCEDURAL BACKGROUND

Gallagher was injured when she fell on a wet floor at the Hotel on July 10, 2012. There is only one Best Western Cottontree Inn in Idaho. The Hotel was owned and operated at that time by Snake River. In preparing to file this suit, Gallagher searched the Secretary of State’s database to determine who owned the Hotel. According to the database, the Hotel was owned by

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L & L Legacy Limited Partnership (L & L) and the certificate of assumed business name was

current. Snake River acquired the Hotel before Gallagher’s injury but failed to file a certificate of

assumed business name with the Secretary of State’s office.

On July 9, 2014, Gallagher filed this suit. After filing the complaint, Gallagher attempted

to serve Scott Eskelson, who was authorized to accept service on behalf of L & L. The record

does not show when Gallagher attempted to serve Eskelson. Mr. Eskelson refused to accept

service and informed Gallagher that the Hotel had been sold to Snake River and that Snake River

owned the Hotel at the time Gallagher was injured. Gallagher filed a motion to extend the time

for service on January 8, 2015. The motion was granted on January 14, 2015. On April 9, 2015,

an amended complaint and summons was served on Snake River. Gallagher and Snake River

filed a stipulation to dismiss L & L. On June 4, 2015, L & L was dismissed from the case with

prejudice.

Snake River filed a motion for summary judgment in which it argued that it had not been

timely joined in the case and that the amended complaint should not relate back to the time the

first complaint was filed. Following a hearing, the district court granted Snake River’s motion for

summary judgment and dismissed the case. Gallagher filed a motion to reconsider, which the

district court denied. Gallagher timely appealed.

II. STANDARD OF REVIEW

“When reviewing an order for summary judgment, the standard of review for this Court

is the same standard used by the district court in ruling on the motion.” Winn v. Campbell, 145

Idaho 727, 729, 184 P.3d 852, 854 (2008) (citing Watson v. Weick, 141 Idaho 500, 504, 112 P.3d

788, 792 (2005)). Summary judgment is proper when, “the pleadings, depositions, and

admissions on file, together with the affidavits, if any, show that there is no genuine issue as to

any material fact and that the moving party is entitled to judgment as a matter of law.” I.R.C.P.

56(c). “If there is no genuine issue of material fact, ‘only a question of law remains, over which

this Court exercises free review.’” Winn, 141 Idaho at 729, 184 P.3d at 854 (quoting Watson, 141

Idaho at 504, 112 P.3d at 792).

III. ANALYSIS

The facts of this case as they relate to the issues on appeal are not in dispute. Neither

party disputes that Snake River failed to file a certificate of assumed business name with the

Secretary of State’s office. Additionally, it is undisputed that Snake River did not receive notice

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of this claim until it was served with the amended complaint on April 9, 2015. The only

questions presented by this appeal are whether the amended complaint relates back to the date of

the original complaint and whether the statute of limitations should be tolled1 due to Snake

River’s failure to file the certificate of assumed business name. These issues will be discussed in

turn.

A. Relation back under Idaho Rule of Civil Procedure 15(c).

Gallagher contends that the amended complaint should relate back to the date that she

filed the original complaint. Gallagher argues that because complaints can be amended at any

time, and because the original complaint was filed within the statute of limitations, the amended

complaint should relate back to that time. The district court found that because Gallagher was

amending her complaint to name a new defendant, Idaho Rule of Civil Procedure 15(c) applied.

Because Snake River did not have notice of the suit within the statute of limitations, the district

court held that the amended complaint could not relate back. The district court’s conclusion was

correct.

Idaho Rule of Civil Procedure 15(c) states,

[a]n amendment changing the party against whom a claim is asserted

relates back if the foregoing provision is satisfied and, within the period

provided by law for commencing the action against the party, the party to

be brought in by amendment (1) has received such notice of the institution

of the action that the party will not be prejudiced in maintaining a defense

on the merits, and (2) know or should have known that, but for a mistake

concerning the identity of the proper party, the action would have been

brought against that party.

I.R.C.P. 15(c). This Court has found the phrase, “within the period provided by law for

commencing the action” to mean within the statute of limitations. Wait v. Leavell Cattle Inc., 136

Idaho 792, 795, 41 P.3d 220, 223 (2001) (citing Hoopes v. Deere & Co., 117 Idaho 386, 389,

788 P.2d 201, 204 (1990)). In Wait, the plaintiff attempted to amend her complaint to name a

1 The district court and the parties have used variations of the verb “toll” in their analysis of the effect of Snake

River’s failure to file a certificate of assumed business name with the Secretary of State. This Court has recently

used the term in this context in Winn and Ketterling v. Burger King Corp., 152 Idaho 555, 272 P.3d 527 (2012). In

doing so, we have been using a convenient shorthand.

“[E]stoppel does not eliminate, toll, or extend the statute of limitations.” City of McCall v. Buxton, 146 Idaho 656,

664, 201 P.3d 629, 637 (2009); Ferro v. Soc’y of Saint Pius X, 143 Idaho 538, 540, 149 P.3d 813, 815 (2006).

Rather, estoppel “bars a party from asserting the statute of limitations as a defense for a reasonable time after the

party asserting estoppel discovers or reasonably could have discovered the truth.” Id. Our use of various forms of

“toll” in this opinion refers to whether Snake River is estopped from asserting the statute of limitations as a defense.

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new party. Id. at 794, 41 P.3d at 222. The district court found that the amended complaint did not

relate back to the filing date of the original complaint because, while the defendant had notice of

the suit within the time allowed for service of process, the plaintiff was unable to show that the

defendant had notice of the suit before the statute of limitations expired. Id. at 795, 41 P.3d at

223.

In this case, it is undisputed that Snake River did not receive notice of the suit until it was

served with the amended complaint on April 9, 2015. The statute of limitations for personal

injury claims is 2 years. I.C. § 5-219. As Gallagher was injured on July 10, 2012, the statute of

limitations expired on July 10, 2014. Because Snake River did not receive notice of the suit

before July 10, 2014, Gallagher failed to meet the requirements of Idaho Rule of Civil Procedure

15(c) and the amended complaint does not relate back to the date the original complaint was

filed.

B. Tolling the Statute of Limitations.

Gallagher next asserts that the statute of limitations should be tolled because Snake River

failed to file a certificate of assumed business name with the Secretary of State. The district court

found that because Gallagher’s only search was of the Secretary of State’s database, Gallagher

did not exercise reasonable diligence in ascertaining the proper party. Because Gallagher did not

exercise reasonable diligence in ascertaining the correct party to sue, the district court declined to

toll the statute of limitations.

Idaho Code section 53-5042 provides that “[a]ny person who proposes to or intends to

transact business in Idaho under an assumed business name shall before beginning to transact

business, file with the secretary of state a certificate of assumed business name in a form

proscribed by the secretary of state.” I.C. § 53-504(1). The purpose of the statute “is to ensure

disclosure on the public record of the true names of persons who transact business in Idaho.” I.C.

2 Chapter 5, Title 53 of the Idaho Code was repealed effective July 1, 2015, 2015 Idaho Sess. L. ch. 251, § 3, p.

1047. Idaho Code section 53-504 was replaced by Idaho Code section 30-21-805. 2015 Idaho Sess. L. ch. 243, § 14,

p. 784. The new statute imposes similar requirements upon those who operate under assumed business names. The

newly enacted statute provides:

(a) Any person who proposes to or intends to transact business in Idaho under an assumed

business name shall, before beginning to transact business, deliver to the secretary of state for

filing a certificate of assumed business name in a form prescribed by the secretary of state.

(b) A separate certificate of assumed business name must be filed for each assumed business name

a person uses.

I.C. § 30-21-805. This opinion will address the operation of the provisions of Chapter 5, Title 53, Idaho Code which

were in effect at the relevant time.

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§ 53-502. The consequences of failing to file a certificate are provided by Idaho Code section 53-

509. Section 53-509 provides that a business may not maintain a legal action in Idaho until it

complies with the statute. I.C. § 53-509(1). It further provides that “[a]ny person who suffers a

loss because of another person’s noncompliance with the requirements of this chapter shall be

entitled to recover damages in the amount of the loss, and attorney fees and costs incurred in

connection with recovery of damages.” I.C. § 53-509(2). While this Court has previously

suggested that we would consider tolling that statute of limitations where a party failed to file a

certificate of assumed business name, we have never been presented facts that would warrant a

tolling. See Winn v. Campbell, 145 Idaho 727, 184 P.3d 852 (2008); see also Ketterling v. Burger

King Corp., 152 Idaho 555, 272 P.3d 527 (2012). The facts of this case are readily

distinguishable from both Winn and Ketterling and would likely qualify under the standard

announced in those cases, however we find that the statutory remedy is adequate and so decline

to apply an equitable remedy in this case. By so holding, we depart from our previous indication

in Winn and Ketterling that we might find circumstances justifying tolling the statute of

limitations when a defendant has failed to file a certificate of assumed business name.

As footnote 1 indicates, although the parties and the Court have referred to the remedy

sought in this case as tolling the statute of limitations, it is more accurate to say that Gallagher

seeks to apply the doctrine of equitable estoppel. It is a fundamental principle that equitable

remedies are only available when “there is no adequate remedy at law and if sufficient grounds

to invoke equity, such as mutual mistake, fraud, or impossibility, are present.” AED, Inc. v. KDC

Investments, LLC., 155 Idaho 159, 166, 307 P.3d 176, 183 (2013). In cases where a business fails

to file a certificate of assumed business name and another party suffers damage, we hold that

there is an adequate statutory remedy at law. Thus, there is no reason to apply the equitable

remedy of tolling the statute of limitations.

Idaho Code section 53-509(2) provides a cause of action for parties who suffer damages

as a result of a party’s failure to file a certificate of assumed business name. In a case where the

plaintiff has been misled to his or her prejudice resulting in the failure to timely name the proper

defendant before the expiration of the statute of limitations, the plaintiff’s damages will include

the lost opportunity for recovery in the original action. Thus, in order to recover in a case such as

this, the plaintiff must show that she would have prevailed in her personal injury action and the

amount of damages she would have recovered, in addition to any other damages that may have

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been proximately caused by the defendant’s breach of its statutory duty. As this is a statutory

remedy, a party must bring this action within 3 years of the accrual of the cause of action. I.C. §

5-218.

Here, although Idaho Code section 53-509(2) was at the heart of the issue before the

district court, because of our previous statements the parties and the district court understandably

directed their attention to the question whether the statute of limitations should be tolled without

consideration of the available legal remedy. Although we find that the district court correctly

dismissed Gallagher’s personal injury action due to the expiration of the statute of limitations,

we remand this case in order to give the district court the opportunity to entertain a motion to

amend the complaint to assert a cause of action against Snake River under Idaho Code section

53-509(2). In view of this result, we find that there is no prevailing party.

We vacate the judgment of the district court dismissing Gallagher’s complaint and

remand for further proceedings consistent with this opinion.

Chief Justice J. JONES and Justices EISMANN, BURDICK and W. JONES, CONCUR.